Japan: Exports moderate ahead of the Chinese Lunar New Year holiday
February 23, 2011
In January, exports increased 1.4% over the same month the year before. The figure marked the slowest pace of expansion since December 2009 and fell short of market analyst expectations, which had exports increasing 7.4%. Nevertheless, the figures does not indicate that external demand is losing steam, as trade figures for January and February are usually distorted by the Chinese Lunar New Year holiday. This year, the holiday was celebrated on 3 February, and regional demand normally weakens in the previous weeks. As a result, shipments to China grew only 1.0% year-on-year in January, while exports to Asia, which account for around 60% of total exports, expanded a meagre 0.4%. In contrast, import growth picked up from the previous month, to a 12.4% increase in January (December: +10.6% year-on-year). The figure confirmed the notion of stronger-than-expected domestic demand, following on the withdrawal of stimulus measures in the third quarter. As a result of the sharp moderation in exports, the trade balance incurred a deficit of JPY 471 billion (USD 5.7 billion) in January, falling back to negative territory for the first time in nearly two years. Despite the sustained recovery observed throughout 2010, exports continue to linger below pre-crisis levels, with the 3-month sum at JPY 16.5 trillion in January compared to the JPY 22.2 trillion peak reached in December 2007.